[MWS (2006 Bhft I) 121-134] ISSN 1470-8078 Verstehende Wirtschaftssoziologie? On the Relationship between Max Weber’s ‘Basic Sociological Concepts’ and His Economic Sociology Richard Swedberg This paper will explore the extent to which we are justified in cast- ing Weber’s economic sociology as an interpretive economic sociol- ogy, or a verstehende Wirtschaftssoziologie.1 The term is nowhere to be found in Weber’s work; but draws a link to Werner Sombart’s phrase verstehende Nationalökonomie (Sombart 1930). The main thrust of Sombart’s argument about an interpretive economics was how- ever that economics belonged to the cultural sciences and should be replaced by sociology.2 The main emphasis here, by contrast, is to examine whether there is any systematic connection between Weber’s chapter on ‘Basic Sociological Concepts’ in Economy and Society and his economic sociology. On the Possible Relevance of Ch. 1 (‘Grundbegriffe’) to Weber’s Economic Sociology Weber’s project of an interpretive sociology (verstehende Soziologie) is famously discussed and presented in the first chapter of Economy and Society, ‘Basic Sociological Concepts’. There is of course an early ver- sion of this text, published in 1913 under the title ‘Some Categories of 1. The author warmly thanks Keith Tribe for shortening a lengthy argument into its current concise form. 2. According to Ludwig Lachmann, ‘During the 1920s, when there was no single dominant school of economic theory in the world, and streams of thought flowing from diverse sources (such as Austrian, Marshallian and Paretian) each had their own sphere of influence, “interpretive” voices (mostly of Weberian origin) were still audi- ble on occasions. After 1930, however, economists all over the world followed Pareto in embracing the method of classical mechanics as the only truly “scientific” style’. ‘Austrian Economics: A Hermeneutic Approach’. in Dan Lavoie (ed.), Economics and Hermeneutics (London: Routledge, 1990), p. 134. © Max Weber Studies 2006, Department of Applied Social Sciences, London Metropolitan University, Old Castle Street, London E1 7NT, UK. 122 Max Weber Studies Beiheft I Interpretive Sociology’ in the journal Logos. This article is divided into a small number of sections, two of which discuss the relationship of interpretive sociology to psychology and law. The relationship to economic theory does not constitute the topic of a separate section, but is touched on in the article. The text also contains references to various economic phenomena, such as money, the stock exchange, and office workers. The closest that Weber comes in the Logos article to a discussion of economic sociology is perhaps where he considers the relation of economic theory to interpretive sociology. We read, for example, that interpretive sociology, just like economic theory, begins analysis by construing that which is to be analyzed as rational. What would it be like if the actors took a rational stance, and how can we explain possible deviations in reality from the rational course of action? The point that Weber is making here is a general point, not restricted to economic sociology but nonetheless applicable to economic sociology. Only in one passage in the Logos article does Weber suggest what an interpretive economic sociology might be. This is in the following interesting passage where Weber discusses the many different types of social action to be found in one and the same economic action: In one and the same act, the individual can naturally, therefore, partici- pate in a number of kinds of social action. A business deal that someone executes with X, who has power of attorney from Y, who may in turn be an ‘agent’ of a voluntary association, includes (1) a verbal and (2) a written association, (3) an exchange association with X personally, (4) another with Y personally, (5) another with the action of those par- ticipating in that voluntary association; (6) and the business deal is, in its conditions, co-oriented toward expectations of the potential action of other exchange partners (competitors from both sides) and toward the corresponding consensuses on legality, etc.3 While this present guidance on how one disentangles an economic action from Weber’s social action-perspective, it does not tell us what an interpretive economic sociology would be like. And a glance at Economy and Society Ch. 1 shows the same result: there are many references to economic theory and to economic examples—but Weber does not give the impression that he is contemplating or leading up to an interpretive economic sociology. This does not mean that Ch. 1 lacks interest for economic sociology. It may be true that Weber nowhere even refers to a Wirtschaftssoziolo- 3. ‘Some Categories of Interpretive Sociology’, Sociological Quarterly 22 (1981), pp. 171-72. © Max Weber Studies 2006. Swedberg Verstehende Wirtschaftssociologie? 123 gie, whereas he does refer to ‘Sociology of Law’ and ‘Sociology of Relig- ion’. There is nonetheless much that an economic sociologist can learn from this chapter. While none of the seventeen paragraphs introduces distinctly economic-sociological concepts, some of the concepts do in- clude an economic meaning among their multiple meanings. This economic meaning may even be the major meaning. As examples of this, one can for example referring to concepts of competition and enterprise.4 Competition is defined as peaceful conflict over the control of opportunities, and enterprise as continuous rational activity. Several of the points made in the Logos article can also be found in Ch. 1, such as the idea that the element of orientation is what differ- entiates economic action (as used in economic theory) from economic social action (as used in sociology); and that the analysis should pref- erably start with a rational model for what has taken place. Both of these are important points in Weber’s economic sociology and they are explicated more fully in Ch. 1 than in the Logos article. We find, for example, the following unambiguous statement in Ch. 1: ‘the eco- nomic activity of an individual is social only if it takes account of the behaviour of someone else’.5 The notion that you begin the analysis with rational action in mind is also illustrated by the case of panic on the stock exchange—as in the Logos article, but with the argument more clearly presented.6 Many of these references are meaningful to those who take Weber’s economic sociology seriously, even if they may fail to engage the average reader. But there also are some exceptions to this and I would like to highlight two of these. The first of these two examples can be found in the paragraph on usage, tradition and self-interest; and it has as its focus empirical uniformities of social action.7 Weber’s argument is that self-interest may produce regularities that are very robust, indeed, often stronger than those types of uniformities that are pro- duced by norms. A special type of deliberate consciousness accom- panies this type of action, driven by Interessenlage. Weber also writes about the manner in which interest-driven actors in a rational market expect other actors to behave in a rational manner, and punish them if they fail to do so. 4. Economy and Society: An Outline of Interpretive Sociology (Berkeley: University of California Press, 1978), pp. 38-40, 52-53. 5. Economy and Society, p. 22. 6. Economy and Society, p. 6; ‘Some Categories’, p. 154. 7. Economy and Society, pp. 29-31. © Max Weber Studies 2006. 124 Max Weber Studies Beiheft I The second example concerns the discussion of property in Ch. 1, which is exceptional in presenting a purely sociological definition of property. Instead of starting from the notion of legal rights, as prop- erty-rights theoreticians do, Weber instead begins from the idea of so-called closed social relationships. When this type of relationship guarantees a monopoly over appropriated advantages to some par- ties, these have equivalent ‘rights’; and when these can be inherited, there is ‘property’.8 Property that can be freely bought and sold (as in the modern usage of this term) Weber terms ‘’free’ property’. Reading Ch. 1 (‘Grundbegiffe’) in Relation to Economic Sociology from Another Perspective This is about as far, I suggest, that a reading of Ch. 1 from the perspec- tive of mainstream economic sociology takes us. I say ‘mainstream’ because from this perspective Weber’s economic sociology is little more than conventional sociology as applied to economic phenome- non, albeit in a sophisticated manner and backed up by Weber’s for- midable knowledge of history. But there is also a way to go beyond this, and this is as follows. We can extract Weber’s conception of interpretive sociology from Ch. 1, and see how it can be applied to economic phenomena. For Weber’s conception of interpretive sociology I refer to what he says on this topic in the first paragraph and its subsequent explication. Just as sociology (though a ‘highly ambiguous word’!) can be defined as the interpretive study of social action, in order to causally account for its course and consequences, economic sociology (an equally ambiguous word!) can be defined as the interpretive study of social economic action, in order to causally account for its course and consequences. Or to paraphrase the formulation of Paragraph 1 in Ch. 1: Economic sociology is a science concerning itself with the interpretive understanding of social economic action and thereby with a causal expla- nation of its course and consequences. We shall speak of ‘economic action’ insofar as the acting individual attaches a subjective meaning that involves the economy to his behaviour—be it overt or covert, omis- sion or acquiescence. Economic action is ‘social’ insofar as its subjective meaning takes account of the behaviour of others and is thereby ori- ented in its course.9 8.